Westports to Begin Taking IPO Orders Next Week

A Successful Offering Could Revive Malaysia's Lackluster Market

By

P.R. Venkat

Sept. 6, 2013 6:21 a.m. ET

Westports Holdings Bhd., a port operator partly owned by Hong Kong billionaire
Li Ka-shing
,
will start taking orders for its initial public offering next week, kicking off a share sale that could raise up to $800 million and rank as Malaysia's biggest this year.

The offering could help rekindle Malaysia's deals market, which was home to some of the world's largest IPOs last year, including state-run palm oil planter
Felda Global Ventures Holdings
Bhd.'s $3.2 billion offering. But this year companies held back on IPO plans ahead of elections in May, and since then deals have been few, partly due to market conditions.

Westports, which operates one of Asia's busiest shipping terminals at Port Klang on the west coast of peninsular Malaysia, had started gauging investor appetite for the IPO earlier this week. It is planning to list on the Malaysian stock exchange by October, two people familiar with the matter said earlier.

Cornerstone investors have already committed to taking more than half of the IPO, one of the people said. The person declined to disclose their names but said most were Malaysian.

Cornerstone investors commit to buying shares in an IPO before it has been formally launched and to holding them for a fixed time period, making the IPO more attractive to other potential investors.

The presence of domestic cornerstone investors will help attract buyers at a time when emerging markets continue to face outflows due to expectations that the U.S. Federal Reserve will soon begin to withdraw its monetary stimulus. Malaysia's benchmark FTSE Bursa Malaysia KLCI is down 2.5% in the past month.

Still, Malaysia has seen a handful of IPOs since the election, but none larger than $500 million since pay-TV operator
Astro Malaysia Holdings
Bhd.'s $1.5 billion debut in October.
AirAsia
X Bhd., the long-haul arm of AirAsia Bhd. , raised $308 million in an IPO in July.

But a successful offering by Westports may give other companies the in the IPO pipeline the confidence to proceed. They include state-backed conglomerate
UMW Holdings
Bhd.'s oil and gas unit and property firm real Iskandar Waterfront Holdings Sdn. Combined, those two could raise more than $2 billion before the end of the year, according to people familiar with their plans.

Hutchison Port Holdings—the Singapore-listed port operator owned by Mr. Li—has a 31.5% stake in Westports. The company was formed by G. Gnanalingam, a second-generation Malaysian of Sri Lankan descent. His oldest son, Ruben, is chief executive.

Westports plans to sell around 813.2 million shares, or a 23.8% stake, according to a draft prospectus posted on Securities Commission Malaysia's website. The company plans to sell about 710.9 million shares, equivalent to a 20.8% stake, to institutional investors, and has set aside certain allotments for both ethnic Malays and indigenous minorities. The remaining 102.3 million shares to retail investors.

Credit Suisse Group AG, Goldman Sachs and Maybank Investment Bank Bhd. are among the banks advising Westports on the IPO.

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